STATE OF INVESTMENT PROMOTION AGENCIES - Evidence from WAIPA-WBG's Joint Global Survey - World Bank Document
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Joint Global Survey
Evidence from WAIPA-WBG’s
PROMOTION AGENCIES
STATE OF INVESTMENTPart 1
First Pillar for Effective
Investment Promotion-
Table of Contents
Corporate strategic
Planning and Sector
PrioritizationAcknowledgments..............................................................................................................................VI
Abbreviations and Acronyms........................................................................................................ VIII
Executive Summary............................................................................................................................X
Survey Overview.............................................................................................................................. XIV
Survey Methodology.......................................................................................................................XVI
Survey Design ..............................................................................................................................XVII
Sample Representation..............................................................................................................XVII
PART 1: FIRST PILLAR FOR EFFECTIVE INVESTMENT PROMOTION: CORPORATE
STRATEGIC PLANNING AND SECTOR PRIORITIZATION
Strategic Integration and Effective Feedback Loops...................................................................1
Investment Promotion Strategy.......................................................................................................1
Sector Prioritization.............................................................................................................................1
Number of Sectors.............................................................................................................................1
Top Priority Sectors..........................................................................................................................1
Emerging Priority Sectors..............................................................................................................3
Declining Sectors.............................................................................................................................. 4
Sources for Sector Targeting......................................................................................................... 4
Resource Allocation for Priority Sectors.....................................................................................6
Client Selection.................................................................................................................................6
Non-Equity Modes of Investment................................................................................................. 7
PART 2: SECOND PILLAR FOR EFFECTIVE INVESTMENT PROMOTION: INSTITUTIONAL
FRAMEWORK
Institutional Structure.......................................................................................................................9
Reporting Lines..................................................................................................................................10
Mandates.............................................................................................................................................10
Board of Directors.............................................................................................................................. 12
Responsibilities of the Board....................................................................................................... 13
TABLE OF CONTENTS | IStaff ..................................................................................................................................................... 14
Staff Composition.......................................................................................................................... 14
Staff Qualifications and Salaries................................................................................................ 14
Overseas and Regional IPA Representation and Subnational IPAs........................................ 16
Overseas Representatives ........................................................................................................... 16
Regional IPA Offices ...................................................................................................................... 17
Subnational IPAs............................................................................................................................. 17
Financial Resources........................................................................................................................... 18
Budget Sources and Size.............................................................................................................. 18
Budget Allocation........................................................................................................................... 19
Institutional Coordination Mechanisms...................................................................................... 20
PART 3: THIRD PILLAR FOR EFFECTIVE INVESTMENT PROMOTION: INVESTOR
SERVICES
Servicing Investors Across the Investment Life Cycle............................................................. 23
WBG Comprehensive Investor Services Framework................................................................. 23
Evaluation of Investors................................................................................................................. 25
Managing the Relationship with the Investor............................................................................ 25
Communications and Social Media............................................................................................27
Databases....................................................................................................................................... 28
Grievance Management............................................................................................................... 29
Monitoring Investment Promotion Function.............................................................................. 29
Measuring Impact.......................................................................................................................... 30
PART 4: CHALLENGES AND CHANGES........................................................................................ 32
Current Picture of FDI and How Traditional Patterns are Changing..................................... 33
Challenges and Changes in Investment Promotion............................................................... 33
Potential Reforms.......................................................................................................................... 35
Conclusions........................................................................................................................................ 36
II | STATE OF INVESTMENT PROMOTION AGENCIESAddendum.......................................................................................................................................... 38
Investment Promotion Agencies’ Response to the Covid-19 Pandemic: Evidence from
WBG And Waipa Rapid Surveys................................................................................................. 39
Rationale............................................................................................................................................................ 39
Methodologies................................................................................................................................................. 39
Findings.............................................................................................................................................................. 39
Conclusion..........................................................................................................................................................44
References.......................................................................................................................................... 46
Annex................................................................................................................................................... 50
Analysis of IPA Characteristics Surveys................................................................................... 51
List of Boxes
Box 1.1: SDGs Influence IPAs’ Sector Targeting............................................................................. 2
Box 4.1: Changes in Investment Promotion as Perceived by IPAs, by Ranking
of Mentions....................................................................................................................................... 34
List of Dashboards
Dashboard 1.1: Top 5 Priority Sectors by IPAs per Income Group............................................. 4
Dashboard 2.1: IPAs’ Organizational Structure before and after Reorganization................9
Dashboard 2.2: Board of Directors and its Structure................................................................ 13
Dashboard 2.3: Budget Dedicated Only to Investment Promotion and FDI......................... 19
Dashboard 3.1: IPAs’ Systems and CRM Software.................................................................... 26
Dashboard 3.2: Resources Dedicated to Social Media in 2018.............................................. 28
Dashboard 3.3: Size and Content of IPAs’ Databases.............................................................. 28
Dashboard 3.4: Analysis and Evaluations of IPAs’ Activities (part 1)................................... 30
Dashboard 3.5: Analysis and Evaluations of IPAs’ Activities (part 2).................................... 31
List of Figures
Figure 0.1: Most IPAs Come from High-Income Countries in Europe and
Central Asia.....................................................................................................................................XVI
Figure 1.1: Majority of IPAs Have a Written, Multiyear Strategy...............................................1
Figure 1.2: IPAs Have Too Many Priority Sectors.......................................................................... 2
TABLE OF CONTENTS | IIIFigure B.1.1: How SDGs Influence IPAs’ Strategies....................................................................... 2 Figure 1.3: Emerging Priority Sectors are Based on High-Value-Added Activities................3 Figure 1.4: Sectors Discarded by IPAs............................................................................................ 4 Figure 1.5: Sources that Inform the IPA Strategy.........................................................................5 Figure 1.6: Methods for Implementing Investment Promotion Plans.......................................5 Figure 1.7: Resource Allocation for Priority Sectors.....................................................................6 Figure 1.8: IPAs’ Client Selection for Services................................................................................6 Figure 1.9: Distribution of IPA Resources....................................................................................... 7 Figure 1.10: NEMs Targeted by IPAs................................................................................................. 7 Figure 2.1: Organizational Structures of IPAs...............................................................................9 Figure 2.2: IPAs’ Reporting Lines....................................................................................................10 Figure 2.3: IPAs Still Have a Myriad of Mandates.......................................................................11 Figure 2.4: Mandates Performed by IPAs......................................................................................11 Figure 2.5: Correlation of Number of Mandates and GDP per Capita.................................... 12 Figure 2.6: Responsibilities of IPA Boards.................................................................................... 13 Figure 2.7: IPAs’ Staff Composition................................................................................................ 15 Figure 2.8: IPAs’ Staff Qualifications............................................................................................. 15 Figure 2.9: IPAs’ Staff Wage............................................................................................................ 16 Figure 2.10: IPA Representation Abroad....................................................................................... 16 Figure 2.11: Regional IPAs’ Offices.................................................................................................. 17 Figure 2.12: Do Countries Have Subnational IPAs?.................................................................... 17 Figure 2.13: Cooperation between National IPAs and Subnational IPAs .............................. 17 Figure 2.14: Percentage of IPAs per IPAs’ Budget Source......................................................... 18 Figure 2.15: Distribution of IPAs’ Total Budget Size................................................................... 18 Figure 2.16: Distribution of IPAs’ Promotion Budget................................................................. 20 Figure 2.17: Use and Rating of Coordination Mechanisms Among Investment Entities in the Location................................................................................................................................. 20 Figure 2.18: Main Obstacles Hindering the Quality of Investment Entities’ Coordination..................................................................................................................................... 21 IV | STATE OF INVESTMENT PROMOTION AGENCIES
Figure 3.1: Criteria IPAs Use to Evaluate Investors................................................................... 26
Figure 3.2: IPAs Using Grievance Management Systems........................................................ 29
Figure 3.3: Methods IPAs Use to Gather and Report Investor Complaints.......................... 29
Figure 3.4: Key Performance Indicators Used by IPAs............................................................. 30
Figure 3.5: Quantifying Benefits and Costs of IPAs’ Work....................................................... 31
Figure 4.1: Issues Affecting IPA’s Effective Performance......................................................... 33
Figure 4.2: Performance Challenges Facing IPAs in Developed and Developing
Countries.......................................................................................................................................... 34
Figure 4.3: Reforms Indicated by IPAs to Improve the Attraction and Retention of
Investments in Their Countries.................................................................................................... 35
List of Tables
Table 0.1: Geographical Distribution of Respondents..............................................................XVI
Table 0.2: Income Distribution of Respondents.......................................................................XVII
Table 1.1: Top 15 Priority Sectors as Designated by IPAs............................................................3
Table 2.1: Number of Mandates by Country Income Group...................................................... 12
Table 2.2: Average Number of IPAs’ Technical Staff................................................................... 14
Table 2.3: IPAs’ Total Budget Size by Income Groups................................................................ 19
Table 3.1: IPA Services Provided as per WBG CISF.....................................................................24
Table 3.2: Top Investor Services Provided by IPAs in 2018.......................................................24
Table 3.3: Most Effective Social Media for IPAs’ Core Activities.............................................27
Table A.1: COVID-19 Impact on Investors, as Reported by IPAs............................................. 40
Table A.2: COVID-19 Negative Impact on Sectors, as Reported by IPAs.............................. 41
Table A.3: Top Measures Implemented by IPAs to Counter COVID-19 Impact
on Investors...................................................................................................................................... 43
TABLE OF CONTENTS | VPart 1
First Pillar for Effective
Investment Promotion-
Acknowledgments
Corporate strategic
Planning and Sector
PrioritizationT
he research and writing of this report were done by Alex Sanchiz, Investment Policy and
Promotion Consultant, World Bank Group (WBG), and Ahmed Omic, Research Analyst, World
Association of Investment Promotion Agencies (WAIPA). The research and report were led by
Armando Heilbron, WBG Senior Private Specialist and Investment Promotion Workstream Leader, and
Andreas Hora, WAIPA Coordinator.
The team would like to thank Ivan Anton Nimac, To advance the field of investment promotion, the
WBG Investment Policy and Promotion Global WBG and WAIPA formalized their collaboration
Lead, and Bostjan Skalar, WAIPA Executive and engaged in joint Investment Promotion Agency
Director, for their substantive support to this work. (IPA) research and related initiatives. This report
The team is grateful to Abhishek Saurav, WBG is a product of such collaboration. Any use, copy,
Senior Economist for his technical contributions, display, distribution or publication of all or part
and to internal and external reviewers who provided of it shall give the express reference to it1 and the
thoughtful insights and guidance, including Ivan previous authorisations of WBG and WAIPA shall
Nimac, Peter Kusek, WBG Senior Economist, be granted.
Abhishek Saurav, Paul Lewis, former Scottish
The World Association of Investment Promotion
Development International (SDI) Managing
Agencies (WAIPA) is an international non-
Director, and Adrian Blanco, Senior Economist
governmental organization established in 1995
and Head of Department at the Spanish Institute for
under the auspices of the United Nations Conference
Foreign Trade and Investment (ICEX).
on Trade and Development (UNCTAD) that acts
The team is also grateful to external reviewers to as a forum to promote and develop understanding
the survey instrument used to conduct this research, amongst investment promotion agencies (IPAs),
including Anna Novik, Sarah Bauerle, Geoff Gertz, providing them with technical assistance and
and Ben Kett. capacity building, and encouraging networking and
exchange of best practices in investment promotion.
A special thank you goes to Sara Proehl and Marcy
Gessel, Publications Professionals LLP, for editing, The World Bank Group (WBG) comprises five
and to Aichin Jones and FPS for providing design, complementary institutions managed by their
layout, and production services. member countries. The group provides financial
resources, knowledge and innovative solutions to
The team acknowledges the many formal and
support development, end extreme poverty, and
informal contributions of individuals, groups,
promote shared prosperity in developing countries
and organizations that responded to the survey or
around the world. To solve today’s development
provided meaningful comments and inputs to enable
challenges, the WBG works with both public
the successful publication of this report. Keeping in
and private sectors. IPAs are key institutions that
mind these contributions, the team apologizes if it
connect both and can contribute to development.
has inadvertently omitted formally acknowledging
any such valuable contributions.
1
Sanchiz, Alex, and Ahmed Omic. 2020. State of Investment Promotion Agencies: Evidence from WAIPA-WBG’s Joint Global
Survey. Washington, DC: World Bank. Geneva: WAIPA (World Association of Investment Promotion Agencies).
ACKNOWLEDGMENTS | VIIPart 1
First Pillar for Effective
Abbreviations
Investment Promotion-
and Acronyms
Corporate strategic
Planning and Sector
PrioritizationAI artificial intelligence
CISF comprehensive investor services framework
CRM customer relationship management
FDI foreign direct investment
IIS investor information system
IPAs investment promotion agencies
IRMS investor-relationship management system
IT information technology
KPIs key performance indicators
NDPs National Development Plans
NEMs non-equity modes
SDGs Sustainable Development Goals
SOPs standard operating procedures
US$ United States dollar
WAIPA World Association of Investment Promotion Agencies
WBG World Bank Group
ABBREVIATIONS AND ACRONYMS | IXPart 1
First Pillar for Effective
Investment Promotion-
Executive Summary
Corporate strategic
Planning and Sector
PrioritizationR
ealizing the importance of overseas investments, governments around the world have established
investment promotion agencies (IPAs) to attract and facilitate investment in their countries.2 Today,
IPAs are an indispensable part of most countries’ development strategies and frequently, they are
the first entity contacted by foreign investors, giving them a main role in the overall site selection process.
Several researchers have addressed the importance and effectiveness of IPAs (Charlton and Davis 2007;
Harding and Javorcik 2011; Harding and Javorcik 2013; Lim 2008, 2018; Morisset and Andrews-Johnson
2004; Wells and Wint 1990; World Bank 2020c).
This report describes the results of the 2020 Global strategic alignment and its focus on investment
Investment Promotion Agencies Survey, which was promotion mandates and strategic segments, ideally
jointly carried out by the World Bank Group (WBG) should be developed before the establishment of the
and the World Association of Investment Promotion agency; however, the reality is that the majority of
Agencies (WAIPA). It provides the investment IPAs develop it after establishment. Either way, a
promotion community with an extensive overview multiyear strategy is an IPA’s road map for attaining
of IPAs’ main characteristics, investor service its goals and objectives. According to the survey,
offerings, challenges, and upcoming opportunities 70 percent of IPAs have a multiyear strategy while
in the investment promotion field. The report is 24 percent of them do not. Furthermore, there are
descriptive in nature (other, more analytical pieces encouraging indications that IPAs’ strategies are
are expected in the near future) and it is structured influenced by the Sustainable Development Goals
around the novel WBG framework for investment (SDGs), mostly when identifying priority sectors
promotion (Heilbron, forthcoming; World Bank and activities.
2020c), which includes the following core pillars:
Given the fierce competition for FDI, it is also
• Corporate strategic planning and sector key to strategically target the sectors that are
prioritization most beneficial to the host economy and that are
• Institutional framework attractive to foreign investors. Sector targeting
• Investor services3 is one part of successful investment promotion.
Existing research shows that sector targeting results
Ninety-one IPAs from various regions and
in higher FDI inflows (Harding and Javorcik 2011).
income groups participated in the survey
However, IPAs tend to have a large number of
between July and December 2019. Key findings
priority sectors: according to the survey findings,
are summarized below.
an IPA has 11 priority sectors on average. The most
popular sectors targeted by IPAs are renewable
Corporate Strategic Planning energy (68 percent of IPAs) and information
and Sector Prioritization technology (IT) services (62 percent of IPAs).
To build an effective IPA, an entity must develop Target sectors are mainly selected on the basis of
a strategy that outlines the main shared objectives a national development plan or a similar high-level
for foreign direct investment (FDI) attraction and policy document (81 percent) or on the basis of
retention and that outlines how to achieve those comprehensive research on global demand and FDI
objectives. The strategy, which sharpens an entity’s emerging trends (49 percent).
2
This report refers to IPAs as institutions that include an investment promotion function or mandate (covering both dedicated
agencies as well as units that do so within larger institutions, such as economic development boards).
3
For more details, see Heilbron (forthcoming), Heilbron and Whyte (2019), and Heilbron and Aranda-Larrey (2020).
EXECUTIVE SUMMARY | XIInstitutional Framework of technical staff working only on investment
promotion and FDI, on average 19 (50 percent) and
The institutional framework of an IPA should ensure seven (53 percent) are women, respectively.
institutional and financial autonomy; operational
independence; coordination with key regulatory
agencies at the national and local levels, as well
Investor Services
as with private sector organizations; and it should IPAs are service providers that play an important
provide a degree of flexibility to adjust its internal role in meeting government objectives for
structure and resources (Heilbron, forthcoming; attracting, establishing, retaining, expanding, and
Heilbron and Whyte 2019; Morisset and Andrews- linking productive private investment. Therefore,
Johnson 2004; World Bank 2020c). The survey it is necessary that they offer high-quality and
reveals that IPAs have different organizational relevant services to foreign investors in different
structures, reporting lines, and mandates. For stages of their investment cycle (Heilbron and
the most part, IPAs are either semiautonomous Aranda-Larrey 2020).
public bodies (37 percent), subunits of ministry The first two stages of the investment life cycle are
(26 percent), or autonomous public agencies (18 the attraction stage and the entry and establishment
percent) that report directly to the ministry of stage. Survey results show that IPAs are focused more
industry or commerce (32 percent). Furthermore, on the provision of services at the attraction stage
they often have several mandates that go beyond versus the entry and establishment stage. The most
investment promotion. An average IPA has eight common services that IPAs provide to investors are
mandates, but about half of all agencies (53 percent) business events and conferences abroad (or within
have between six and 10 mandates. the country) to promote priority sectors (93 percent)
IPAs vary significantly regarding their financial during the attraction stage; guidance on government
and human resources. Financial flexibility greatly structure and regulatory and nonregulatory aspects
influences many aspects of IPAs including the for business start-up (77 percent) at the entry and
quantity and quality of staff, the range of performed establishment stage; communication with investors
activities, and the existence of overseas and to gather information about grievances related
regional offices. Survey results show that almost to government conduct, and the provision of
all IPAs are financed through governments’ public tailored responses to questions asked by investors
funds, and that 34 percent have a budget below (65 percent) during the third stage, retention and
US$2 million. Regarding the budget for promotion expansion; and the facilitation and coordination
mandate, the biggest portion of this budget is of initiatives and events that provide networking
allocated to investment generation, and the smallest opportunities in the local ecosystem (64 percent)
portion is allocated to policy advocacy, despite its at the linkages and spillovers, the last stage of the
importance in shaping a better investment climate. investment life cycle.
When it comes to IPAs’ staff, on average an IPA has In addition, IPAs evaluate investors prior to
161 full-time employees, including 129 technical providing any services or grants. The evaluation
staff—of which 61 (or 47 percent) are women—but is mainly based on the investor’s potential positive
only a few of those technical staff are dedicated influence on the economy (job creation, exports,
to investment or FDI promotion. On average, 38 training, linkages, provision of basic services or
staff work solely on investment promotion, while infrastructure, etc.) and on the investor’s negative
13 work exclusively on FDI. Of the total number environmental and/or social impacts.
XII | STATE OF INVESTMENT PROMOTION AGENCIESWith the right information, an IPA can provide and the emergence of new technologies and
quality services and manage relationships with digitalization is changing the way international
investors. Therefore, IPAs need to have a well- business is conducted. For example, today, to reach
developed information management system (Ortega global markets requires less of an investment in
and Griffin 2011). IPA needs the following three heavy assets. International production tends to be
internal systems to manage information and service based more on intangibles, that is, royalties and
investors: an investor information system (IIS), an licensing fees, and light forms of assets (UNCTAD
investor-relationship management system (IRMS) 2019). In addition, recent unilateral trade policies
that is built on customer relationship management and more restrictive rules on FDI have increased
(CRM) software, and standard operating procedures the uncertainty in global markets. It is likely that
(SOPs). The survey reveals that 62 percent of all of these factors will negatively affect global
IPAs have a CRM, 68 percent have SOPs, and 43 FDI flows. The negative FDI trend is an important
percent have a shared information system in place. concern for IPAs because overseas investments are
In addition, IPAs use social media to promote their an essential element in countries’ efforts to stimulate
services and establish communication with their and enhance economic development.
target audiences. Survey results reveal that IPAs
In addition, these factors are bringing new changes
allocate financial and human resources for that
and challenges that IPAs will need to address.
purpose: 83 percent of IPAs dedicate up to two
The study reveals that the most common changes
full-time employees to manage their social media
anticipated by IPAs are the impact of digitalization
activities, and annual expenditures on social media
and technology disruptions (56 percent), changes
vary. For example, 44 percent of IPAs dedicate up
in the markets (30 percent), new investment
to US$10,000 annually on social media, while 23
promotion methods (23 percent), policy and
percent spend more than US$100,000 annually.
regulatory changes (18 percent), and global and
trade uncertainty (11 percent).4 The main challenges
Challenges and Changes in that IPAs face are related to budgetary issues and
Investment Promotion financial limitations, the capacity of their staff, and
The FDI landscape is changing. In 2019, global bureaucratic and procedural issues. In the survey,
FDI inflows rose modestly to US$1.54 trillion, IPAs were asked to identify the main reforms that
which was a 3 percent increase from the previous they would like to see in the near term to improve
year (UNCTAD 2020); however, several forecasts the attraction and retention of investments in their
indicate that FDI flows will plummet in 2020 countries—the reforms identified included better
because of COVID-19. Also, competition among institutional coordination (59 percent), followed by
countries to attract and retain FDI is increasing, better strategic alignment (44 percent), and more
streamlined regulations (43 percent).
4
COVID-19 was not an issue at the time of the survey, which ran from July to December 2019.
EXECUTIVE SUMMARY | XIIIPart 1
First Pillar for Effective
Investment Promotion-
Survey Overview
Corporate strategic
Planning and Sector
PrioritizationI
nvestment promotion agencies (IPAs) interact directly with investors and they serve as an intermediaries
between foreign investors and the government. In many developing countries, foreign direct investment
(FDI) provides the principal link to highly skilled jobs, innovation, access to major markets, and other
important positive spillovers.
The World Bank Group (WBG) and the World and investor-centric approach that would benefit
Association of Investment Promotion Agencies all IPAs, regardless of their level of development
(WAIPA) conducted a survey from July to (Heilbron and Aranda-Larrey 2020). For the
December 2019 to capture the innovative purpose of the survey, the model defines four
approaches of investment promotion; to service categories within investment promotion:
gauge where improvements can be made;
• Marketing services, to build a positive
and to understand the trends, challenges, and
image for investment destination (in general
opportunities that IPAs face today.
or in certain sectors), which could include
The report uses the survey results to present an relevant advertising, participation in business
overview of IPAs’ main characteristics and the events, public/media relations and network
investor services that they provide. It is structured development, and one-on-one investor outreach;
around the novel WBG framework for investment
• Information delivery for investor decision-
promotion, which includes the following core
making (attraction), entry and establishment,
pillars (Heilbron, forthcoming; World Bank 2020c):
operations and linkages with domestic suppliers;
• Corporate planning and sector prioritization:
• Assistance to investors to contribute to success
Improving strategic focus via corporate and
during decision-making (attraction), entry,
strategic plan development and improving sector
establishment, and operations, including
prioritization for investment promotion.
investment retention, grievance management,
• Institutional framework for FDI: expansion support and introductions to
Strengthening the IPA’s institutional framework suppliers; and
by improving governance, resources, tools,
• Advocacy to improve the investment climate
capacities, and institutional coordination among
and ecosystem by engaging with investors,
key stakeholders.
identifying obstacles to competitiveness,
• Investor services: Improving investor-focused and supporting relevant decision-makers
services on the basis of the comprehensive and stakeholders with the formulation and
investor services framework (CISF). implementation of solutions.
The CISF framework helps governments and By providing these services across the four stages
their IPAs understand the importance of providing of the investment life cycle,5 IPAs can ensure that
services to investors at every stage of the investment they satisfy the needs of investors and establish a
life cycle,4 beyond the first stage of attracting them long-term relationship with them, to the benefit of
to invest in the country (the attraction stage), by the country and the investor.
providing a more comprehensive, service-oriented,
5
The four stages of an investment life cycle are attraction, entry and establishment, retention and expansion, and linkages
and spillovers.
SURVEY OVERVIEW | XVPart 1
First Pillar for Effective
Investment Promotion-
Survey Methodology
Corporate strategic
Planning and Sector
PrioritizationT
he following sections describe the methodology and the sample used in the survey.
Survey Design
The survey questionnaire was based on the over time, a second round of the survey is planned
combination of several previous WBG and for 2021–22. To the extent possible, the second
WAIPA surveys.6 It consisted of 10 sections and round will target respondents from the first round.
69 questions and was designed to capture each A wider survey exercise including subnational IPAs
IPA’s corporate strategic planning, key institutional will be pursued for the next edition of this report.
aspects, and service offering to investors, as well
In terms of geographic classifications, the sample
as the main changes and challenges that IPAs
for the survey is relatively well distributed
are experiencing. Specifically, information was
globally, as shown in figure 0.1. According to the
collected on IPA strategic planning, organizational
latest WBG regional classification, the highest
structure, reporting lines, mandates, board of
representation of IPAs comes from Europe and
directors, financial and human resources, overseas
Central Asia (37 percent of agencies), followed
representation, investor service offerings along the
by Sub-Saharan Africa (22 percent), Latin America
investment life cycle, key changes and challenges
and the Caribbean (13 percent), East Asia and
for IPAs, the importance of and the effect of the
Pacific (11 percent), Middle East and North Africa
global economic landscape and megatrends on
(10 percent), South Asia (4 percent), and North
these agencies.
America (2 percent). The lowest response rate (40
The survey was conducted from July to December percent) was from IPAs in East Asia and Pacific
2019 using an online survey platform. The link to and the Caribbean, which is still considered a good
the questionnaire was sent to C-level executives response in surveys.
(CEOs, CFOs or managing directors) working in
In terms of income classifications,7 41 percent of
IPAs from around the world.
IPAs are from high-income countries, 29 percent
are from upper-middle-income countries, 22
Sample Representation percent are from lower-middle-income countries,
On the basis of the analysis of WBG’s and WAIPAs’ and 9 percent are from low-income countries.
census of IPAs, 162 national IPAs were contacted,
Table 0.1 shows the regional distribution, per the
with the goal of 100 IPA responses, or a 62 percent
latest WBG regional classification, of the 162
response rate. After two additional months of follow
national IPAs contacted and the response rate, the
up, a total of 91 IPAs responded to the survey, out
latter varying significantly among regions: while
of which 97 percent are national IPAs and 3 percent
North America and Europe and Central Asia had
are subnational IPAs. The selected subnational IPAs
high conversion from contacted to respondent,
are included in the analysis because they operate
some other regions had low levels of response,
in regions that have autonomous government and
such as East Asia and Pacific (40 percent). Of the
economic independence. To assess changes in IPAs’
91 respondents, 34 agencies are from Europe and
characteristics, service offerings, and challenges
6
See annex 1 for the analysis of IPA characteristics surveys.
7
WBG income classification: low-income economies are defined as those with a Gross National Income per capita of $1,025
or less in 2018; lower-middle-income economies are those with a GNI per capita between $1,026 and $3,995; upper-middle-
income economies are those with a GNI per capita between $3,996 and $12,375; and high-income economies are those with
a GNI per capita of $12,376 or more.
SURVEY METHODOLOGY | XVIICentral Asia, 20 are from Sub-Saharan Africa, 12 middle-income countries (58 percent) have the
are from Latin America and the Caribbean, 10 are highest response rates, followed by lower-middle-
from East Asia and Pacific, 9 are from Middle East income countries (51 percent) and low-income
and North Africa, 4 are from South Asia, and 2 are countries (33 percent). Of the 91 IPAs that responded
from North America. to the survey, 37 are from high-income countries,
26 are from upper-middle-income countries, 20
Table 0.2 shows the income distribution of the 162
are from lower-middle-income countries, and 8 are
contacted IPAs and the response rate. IPAs from
from low-income countries.
high-income countries (69 percent) and upper-
Figure 0.1: Most IPAs Come from High-Income Countries In Europe and Central Asia,
n=91
By Region By Income Level
East Asia and
Pacific, 11%
Sub-Saharan Africa,
22% Middle East and
North Africa,
10%
Upper-middle- Low-middle-
income, 29% income, 22%
North
Europe and Central Latin America and South America,
Asia, 37% the Caribbean, 13% Asia, 4% 2% High-income, 41% Low-income, 9%
Table 0.1: Geographical Distribution of Respondents, n=91
IPAs IPAs Response
Responses,
World Bank Group Region Contacted, Contacted, Rate,
Number
Number Percent Percent8
East Asia and Pacific 25 15% 10 40%
Europe and Central Asia 43 27% 34 79%
Latin America and the Caribbean 27 17% 12 44%
Middle East and North Africa 17 11% 9 53%
North America 2 1% 2 100%
South Asia 7 4% 4 57%
Sub-Saharan Africa 41 25% 20 49%
8
Based on the total number of IPAs contacted per region.
XVIII | STATE OF INVESTMENT PROMOTION AGENCIESTable 0.2: Income Distribution of Respondents, n=91
IPAs IPAs Response
Responses,
Income Group Contacted, Contacted, Rate,
Number
Number Percent Percent9
High-income 54 33% 37 69%
Upper-middle-income 45 28% 26 58%
Lower-middle-income 39 24% 20 51%
Low-income 24 15% 8 33%
9
Based on the total number of IPAs contacted per income group.
SURVEY METHODOLOGY | XIXPart 1
First Pillar for Effective
Investment Promotion-
Promotion:
Corporate Strategic
strategic
Planning and Sector
PrioritizationStrategic Integration and Effective Feedback Loops
T
he first pillar of the World Bank’s new framework on investment promotion establishes the importance
of having investment promotion strategies and IPA corporate plans aligned with a country’s FDI strategy
and national development plans (NDPs), including a systematic approach to identify key sectors in
which to focus efforts, explicit and quantifiable objectives, a roadmap toward providing relevant services to
investors, and a proper mechanism to measure success (Heilbron, forthcoming; World Bank 2020c).
These plans also set out the strategic pillars and tactics
through which those objectives are to be met and
Sector Prioritization
relate them through a “logical framework” including Sector targeting and prioritization is a good
inputs, activities, outputs, outcomes, impacts, and investment promotion practice (Loewendahl 2001;
the type of FDI to be targeted, based on an objective Proksch 2004). Investment promotion practitioners
assessment of the location’s competitiveness, and and WBG operational experience also have shown
typically addressing relevant opportunities at all that the most effective way to attract FDI is to focus
stages of the investment life cycle. on a select number of priority sectors rather than
attending to all types of investors Harding and
Javorcik 2011; World Bank 2020c).
Investment Promotion
Strategy Number of Sectors
An IPA’s performance benefits from having a written, The survey reveals that IPAs have a very large
multiyear strategy that links day-to-day activities, number of “priority” sectors—on average, an IPA
outputs, and investor services to outcomes and has 11. When looking at the distribution of priority
impact. Stemming from the location’s development sectors over different ranges, 44 percent of the
plans, an investment promotion strategy should survey respondents indicated more than 10 priority
enable the attraction, entry, establishment, sectors and 26 percent indicated 8 to 10 priority
retention, and expansion of productive investment, sectors (figure 1.2).
as well as its linkages with the domestic productive
sector, thereby maximizing the benefits from the Top Priority Sectors
investment. Figure 1.1 shows that 70 percent of the As discussed in box 1.1, IPAs are realizing the
IPAs (63 of the 90) that responded have a multiyear important role they have in attracting sustainable
strategy while 24 percent of them (22) still lack this investment and reaching SDGs. Table 1.1 presents
key document to guide their operations. Moreover, the top 15 priority sectors for promotion, as reported
box 1.1 shows how Sustainable Development by IPAs. A staggering 68 percent of IPAs indicate
Goals are gaining importance in IPAs’ strategy renewable energy as a high-priority sector, which
development and sector targeting. aligns well with SDGs 7 and 11. Other popular
Figure 1.1: Majority of IPAs have a Written, Multiyear Strategy, n=90
70% 24% 6%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Yes No Don’t know
PART 1: FIRST PILLAR FOR EFFECTIVE INVESTMENT PROMOTION | 1sectors are IT services (targeted by 62 percent of Dashboard 1.1 indicates the distribution of the top
IPAs); pharmaceuticals, biotechnology, and medical five priority sectors by IPAs per income group.
devices; agriculture, fishing, and forestry; food Renewable energy is among the top three priority
products and beverages; and computer and software sectors across all income groups. Furthermore,
services. IPAs from high-income countries tend to focus
Box 1.1: SDGs Influence IPAs’ Sector Targeting
Since 2015, many agencies and think tanks have assessed the need for specific Sustainable
Development Goals (SDGs) targets and have renewed their estimates for required SDGs
financing. A recent International Monetary Fund study on SDGs financing found a gap of
$2.6 trillion for developing economies. Investment promotion agencies (IPAs) and firms have
found sustainability increasingly important in the investment decision process. Survey
results reveal that IPAs’ strategies also are influenced by SDGs. On a 0 to 5 scale, IPAs rated
the influence of SDGs on several key areas of their strategies: SDGs have the most influence
on the identification of priority sectors and activities (3.78), followed by the establishment
of strategic partnerships (3.62), and the evaluation of an IPA’s performance (3.42).
Figure B.1.1: How SDGs Influence IPAs’ Strategies, n=90
In helping identify sectors or activities for investment 3.78
In establishing strategic partnerships with policy makers 3.62
at the national or international level
In helping evaluate the IPA’s performance 3.42
In establishing connections with private sector actors 3.38
1 2 3 4 5
Weighted average, on a 1-5 scale
Figure 1.2: IPAs have Too Many Priority Sectors, n=73
15% 15% 26% 44%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
1–4 5–7 8–10 >10
2 | STATE OF INVESTMENT PROMOTION AGENCIESTable 1.1: Top 15 Priority Sectors as Designated by IPAs, n=73
Sector IPAs, Percent
Renewable energy 68%
IT services 62%
Pharmaceuticals, biotechnology, and medical devices 62%
Agriculture, fishing, and forestry 62%
Food products and beverages 58%
Computer and software services 53%
Transport and telecommunications 49%
Hotels and restaurants 47%
Health services 44%
ITC equipment and electronics 44%
Construction 40%
Computers and electronic equipment 40%
Machinery, equipment, and metal products 38%
R&D-intensive sectors in general 38%
Other travel and tourism-related services 37%
Notes: ITC = Information, technology and communications; IT= information technology. R&D = Research and Development.
more on high-value-added sectors. Regarding the Emerging Priority Sectors
other income groups, the results include a mixture IPAs are constantly trying to adapt their targeting
of high-value-added sectors and primary sectors. strategies to market trends and demands—an
In general, IPAs in the other income groups focus extremely relevant trait in a post–COVID-19
more on primary sectors such as agriculture, fishing, world. The survey asked IPAs to identify the sectors
and forestry. This sector is the top priority sector of that they had prioritized in the past three years.
the upper-middle-income group (81 percent), the Twenty-one percent of IPAs identified renewable
lower-middle-income group (87 percent), and the energy as an emerging sector (figure 1.3), which is
low-income group (100 percent). not surprising given the need for more sustainable
Figure 1.3: Emerging Priority Sectors are Based On High-Value-Added
Activities, n=73
R&D-intensive Transport and
Renewable energy, Food products and Agriculture, fishing, sectors in general, telecommunications,
21% beverages, 14% and forestry, 14% 12% 12%
Note: R&D = research and development.
PART 1: FIRST PILLAR FOR EFFECTIVE INVESTMENT PROMOTION | 3Dashboard 1.1: Top 5 Priority Sectors by IPAs Per Income Group, n=73
High-income Upper-middle-income
Pharmaceuticals, biotechnology, Agriculture, fishing,
and medical devices 68% and forestry 81%
Renewable energy 68% IT services 67%
IT services Food products and
68% beverages 62%
Transport and Computer and software
telecommunications 58% services 62%
R&D-intensive sectors 62%
in general 52% Renewable energy
0% 20% 40% 60% 80% 0% 20% 40% 60% 80% 100%
Low-middle-income Low-income
Agriculture, fishing, Agriculture, fishing,
87% and forestry 100%
and forestry
Food products and 80% Renewable energy 83%
beverages
Other travel and 67%
Renewable energy 73% tourism-related services
Pharmaceuticals, biotechnology, Textiles, apparel, leather 67%
and medical devices 67%
Computer and software services 60% Hotels and restaurants 67%
0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100%
Note: R&D = research and development.
sources of energy. The other emerging sectors construction (strongly related to real estate, 8
identified are food and beverages production (14 percent), wholesale and retail trade (8 percent), and
percent), agriculture (14 percent), R&D–intensive financial services (8 percent) (figure 1.4).
sectors in general (12 percent), and transport and
telecommunications (12 percent). Sources for Sector Targeting
Survey results show that IPAs select their priority
Declining Sectors sectors mainly on the basis of a national development
In the past five years, IPAs have stopped promoting plan or a similar high-level policy document (81
the real estate sector (15 percent of the IPAs percent). In addition, they select priority sectors
surveyed). Other common sectors that IPAs have on the basis of comprehensive research on global
discarded are media and entertainment (9 percent), demand and FDI emerging trends (49 percent).
Figure 1.4: Sectors Discarded by IPAs, n=75
Financial services
Media and Wholesale and including
Real estate, 15% entertainment, 9% Construction, 8% retail trade, 8% insurance, 8%
4 | STATE OF INVESTMENT PROMOTION AGENCIESFigure 1.5: Sources that Inform the IPA Strategy, n=75
Taken from a national development strategy or
other policy document 81%
Selected based on research on global demand, 49%
FDI trends, export potential, etc.
Selected by IPA management in consultation 47%
with stakeholders
Selected by the office to which the IPA reports 16%
Selected by IPA management alone 5%
Selected by without detailed analysis 0%
0% 20% 40% 60% 80% 100%
Note: FDI = foreign direct investment; IPA: investment promotion agency.
Only a handful of agencies make this decision performing comprehensive sector research (77
independently. All IPAs select their priority sectors percent), organizing sector events (71 percent),
after a detailed analysis (figure 1.5). participating in sector trade shows (69 percent),
and launching investor targeting campaigns for
After identifying sectors, IPAs begin implementing
selected sectors (64 percent). Interestingly, in a
investment promotion plans for these priority sectors
contact-driven function of investment promotion,
through various means including participating
only 27 percent of IPAs purchase investor databases
in sector events and conferences (81 percent),
(figure 1.6).
Figure 1.6: Methods for Implementing Investment Promotion Plans, n=75
Participation in sector events/conferences 81%
Comprehensive sector research 77%
Organization of events, conferences, and trade shows 71%
Participation in sector trade shows 69%
Investor-targeting campaigns for priority sectors 64%
Sector-specialized and dedicated staff 59%
Relationship-building with existing investor communities 56%
Website section for each priority sector 51%
Communications and PR campaigns 49%
Purchase of sector intelligence/research reports 32%
Purchase of investor databases for the sector 27%
Other 7%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Note: PR = Public relations.
PART 1: FIRST PILLAR FOR EFFECTIVE INVESTMENT PROMOTION | 5Resource Allocation for Priority and domestic firms (83 percent of IPAs), to large
domestic firms (80 percent), and to small- and
Sectors medium-size domestic firms (79 percent). Sixty two
IPAs allocate significant financial and human
percent of IPAs are also working on mega deals.
resources to the activities related to priority sectors.
According to survey results, 28 percent of IPAs IPAs usually distribute their resources between the
dedicate more than 75 percent of resources to this following clients:
purpose—4 percent of agencies dedicate all of their
• Large foreign firms
resources to activities related to priority sectors
(figure 1.7). • Small- and medium-size foreign firms
• Joint ventures between foreign and domestic firms
Client Selection • Small- and medium-size domestic firms
IPAs mostly offer their services to foreign
companies, but domestic businesses also are on • Large domestic firms
their list of clients. According to the survey, nearly Based on survey findings, IPAs dedicate the
all IPAs provide services to foreign firms, including largest percent of their resources, both financial
small- and medium-size foreign firms (97 percent and human, to large foreign firms (34 percent).
of IPAs) and large foreign firms (96 percent of IPAs distribute a smaller portion of their resources
IPAs) (figure 1.8). A large proportion of them also to domestic firms (see figure 1.9 for additional
provide services to joint ventures between foreign resource allocation numbers).
Figure 1.7: Resource Allocation for Priority Sectors, n=75
17% 24% 27% 28% 4%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Less than 25% 25-50% 50-75% More than 75% 100%
Figure 1.8: IPAs’ Client Selection for Services, n=71
Small- and medium-sized foreign firms 97%
Large foreign firms 96%
Joint ventures between foreign and domestic firms 83%
Large domestic firms 80%
Small- and medium-sized domestic firms 79%
Mega deals 62%
0% 20% 40% 60% 80% 100%
6 | STATE OF INVESTMENT PROMOTION AGENCIESFigure 1.9: Distribution of IPA Resources, n=71
Large foreign firms 34%
Small- and medium-sized foreign firms 27%
Small- and medium-sized domestic firms 17%
Joint ventures between foreign and
domestic firms 13%
Large domestic firms 12%
Mega deals 10%
0% 10% 20% 30% 40% 50%
Non-Equity Modes of Investment 2011). IPAs were asked if they are following
Traditionally, the types of investments that IPAs NEMs as part of their target strategies—47
focus their efforts on are greenfield FDI and percent of IPAs have not considered any NEMs
mergers and acquisitions. However, non-equity (figure 1.10). However, a notable percentage
modes (NEMs) of investment such as contract of IPAs have targeted some NEMs, including
manufacturing, service outsourcing, and contact service outsourcing (34 percent of IPAs), contract
farming have grown in importance because manufacturing (30 percent), contract farming (20
of their flexible nature and their dispersion of percent), and licensing (15 percent).
knowledge, technology, and skills (UNCTAD
Figure 1.10: NEMs Targeted by IPAs, n=74
NEMs not considered 47%
Service outsourcing 34%
Contract manufacturing 30%
Contract farming 20%
Licensing 15%
Franchising 14%
Management contracts 9%
Other 4%
0% 10% 20% 30% 40% 50%
Note: NEMs = Non-equity modes of investment.
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